IMPROVING UNDERSTANDING THROUGH INTERLINKAGES

TRADE AND INDUSTRY

Trade is incredibly powerful, with taxes, tariffs, import
quotas and subsidies imposed elsewhere affecting
opportunities for human well-being and sustainable
environmental management in the developing world,
including in Africa.

The global market and the policies of multilateral
economic organizations have implications for the Africa
region. The balance of power in international trade
organizations, such as the World Trade Organization
(WTO), is tilted in favour of rich countries despite each
country having an equal vote (WRI and others 2005).
Trade and trade-related agreements, such as those on
intellectual property, may affect the trade opportunities
for African countries. Trade liberalization may make it
more difficult for countries to pursue their environmental
policies where these affect free market opportunities
and may demand wide-scale reforms, with uncertain
benefits that developing countries can ill afford.
Negotiations in multilateral fora may favour those with
better access to financial and human resources.

As the Commission for Africa (2005) noted,
protectionist policies in some countries have adversely
affected fisheries and trade in cotton and sugar in
Africa. For example, despite the impressive efforts to
reform the cotton sector in Benin, Burkina Faso, Chad
and Mali, the persistence of cotton subsidies elsewhere
has depressed world prices and damaged their cotton
industry (OECD Development Centre and AfDB 2005).

Subsidies are not the only barriers that Africa faces in
international trade. There are also non-tariff barriers and
standards which may be difficult for many African
nations to comply with. The composition of Africa’s
exports has essentially remained unchanged and its
share of world trade has collapsed from about 6 per cent
in the 1980s to 2 per cent in 2002 (Commission for
Africa 2005). Had its share increased by 1 per cent,
Africa’s share in the world market would have earned it
US$70 000 million, about five times what the region
received in development aid (Watkins and Fowler 2002).

The trade situation of African countries is further
worsened by the dependence on a very narrow range of
primary commodities (coffee, cocoa, tea, palm oil and
minerals). In SSA, for example, those commodities
account for about half of merchandise exports. Table 1
shows this trend for selected African countries. The
consequences of this dependency are four adverse
trends that militate against increasing the countries’
share in international trade (Watkins and Fowler 2002):

Slow market growth;

Adverse price trends;

Low value-added; and

Market competition.

Table 1: The significance of trade in primary commodities

Country

Commodity

Gross national income

Percentage share of total merchandise exports

Total agricultural exports

Malawi

Tobacco leaves

23.8

59

74

São Tomé and Príncipe

Cocoa beans

16.9

69

97

Burundi

Coffee

7.2

75

83

Kenya

Tea

6.5

26

42

Guinea-Bissau

Cashew nuts

6.3

48

91

Chad

Cotton

5.7

37

71

Ethiopia

Coffee

5.4

62

69

Burkina Faso

Cotton

4.9

39

77

Source: FAO 2002

Liberalized trade measures have led to loss of global
market share and substantial income in many African
countries. The share of food and agriculture in total
merchandise trade fell from 17 per cent to 10 per cent
from 1980 to 1997 (OECD 2000); the terms of trade
for Africa’s commodity exports were 20 per cent lower
at the end of the 1990s than in the early 1970s.
Without this, Africa’s share of the world export markets
would have been twice as large as it is today (UNCTAD
2001). Many agricultural markets are dominated by
rich countries, which subsidize their own farmers at
US$1 000 million a day (OECD 2000) or US$365 000
million annually. Trade protectionism by the rich
industrialized regimes is the antithesis of free and
liberalized trade, policies that have been recommended
to developing countries.

Currently, manufacturing, trade, transportation,
urbanization, and other activities in the industrialized
regions put considerable pressures on the biosphere
and stratosphere which influence the environment in
Africa and other parts of the world. The G8 countries
account for 45 per cent of global greenhouse gas
emissions, which is a major cause of climate change,
global warming and extreme weather events (Valente,
2005). These changes trigger a series of inter-related
biophysical and socioeconomic circles such as drought,
floods, hunger, displacement of people and loss of
livelihoods, as shown in Box 7. These impacts are
particularly severe in Africa given the dependency on
natural resources for both subsistence livelihoods, and
industry and manufacturing, With more than seven out
of ten people engaged in resource-dependent activities,
such as subsistence farming, livestock production,
fishing, hunting, artisanal hunting and logging (WRI and
others 2005), biophysical environment change,
whether sudden or cumulative, impacts negatively on
the majority of the people.

To respond affectively to these challenges, Africa
needs to improve its global competitiveness. As
discussed in Chapter 1: The Human Dimension,
technological and infrastructural investment, developing
niche markets, and improving economic and political
governance through reducing corruption and conflict are
all important strategies to respond to the environmental
challenges and to enhance opportunities.